Finding Support for Palantir, Charting the Lead Up to Jackson Hole, Fed Rumbles and Mumbles

Another low trading volume day? The reduced market activity had been expected ahead of Fed Chair's Jackson Hole address this Friday. The lack of any positive or negative headlines coming in the days that followed Pres. Trump's meeting with Ukraine's Pres. Zelenskyy and many of their European counterparts on Monday has only added to the stillness. Something different did happen on Wednesday, though, and the release of the Federal Open Market Committee Minutes later in the session had nothing to do with it.

So goes the AI-trade, so goes the market? Maybe it was the other way around. No matter how one slices it, Tuesday's aggressive selloff carried over into Wednesday morning until markets found an intraday bottom, less than 90 minutes after the opening bell. From there, the S&P 500, Nasdaq Composite and stocks like Palantir Technologies PLTR and Nvidia NVDA made a V-shaped recovery that did not quite get them back to Tuesday's closing levels but did permit investors to ponder the very idea. ​

This is what the last two days look like on a five-minute chart. Incredible. Look at the way momentum-chasing algorithms raced each other into the abyss on Wednesday morning and then raced each other out of that hole. You've really got to know your levels in 2025. You always did. Now, however, with next to no human participation, the only way to compete is figure out where you want to enter into, exit from or add to trades and what the technical analysts employed by those writing the algorithms see.

Fundamental analysis still matters. Perhaps more than many think. The fundamentals tell us where the bus is headed over the medium to long-term. Technical analysis tells us where the bus stops are. As algorithms have largely replaced human traders on Wall Street, reliance upon chart-reading has only increased and actual corporate or economic fundamental analysis has been less and less emphasized in day-to-day price discovery.

Is this a perversion or an abuse of our marketplace? Of course it is. Learning how to beat the machines at their own game is also part of survival. This is how we adapt, how we improvise and how we overcome. There is always a weakness on the other side. We will always find it. We will always outwork them. This is the big leagues. Being smart is fine. Your pedestrian 140 to 150 IQ is average at best in this neighborhood. Everyone is smart here. Work ethic has always been and will continue to be our differentiator. It's how we win.

Wednesday

By day's end, the S&P 500 had given up just 0.24%, while the Nasdaq Composite had suffered a more severe 0.67% loss. The Dow Transports that had done so well earlier in the week, gave back 1.89%. The KBW Banks actually closed in the green. Huzzah! The mid-day, mid-week rebound was most visible at the sector level.

Seven of the 11 S&P sector SPDR ETFs closed on the plus side for the session, led by Energy XLE. Defensives still outperformed cyclicals other than Energy or the Financials XLF, which is somewhat troubling. The Discretionaries XLC led the losers for the day. Recreational Products were the worst performing industry within the Discretionaries. A period of consumer belt-tightening on the way? Could be.

Looking at breadth, again we learn little. Again, the market falls short of putting together a true "Day One" bearish change of trend, despite the fact that the S&P 500 has closed in the red for four consecutive sessions. Is that a positive? Maybe. Remember the Equal-Weight S&P 500 closed in the green on Tuesday and barely closed lower on Wednesday. Broader markets have not truly participated in this period of weakness.

Losers beat winners at the NYSE by just a smidgen and at the Nasdaq by a 6-to-5 margin. Advancing volume took a 50.3% share of advancing NYSE-listed trade (not a misprint) and a 42.4% share of composite Nasdaq-listed activity. Trading volume was slightly higher on a day over day basis across NYSE-listings, but notably lower across Nasdaq-listings.

Staying on Top of Palantir

Add some Palantir PLTR shares on Wednesday? I did. Several times. The stock closed at $156.01 after trading as low as $142.34. At the low, the shares were down 9.8% for the day and down 18.2% from Monday's closing level. For Wednesday, in its entirety, the stock closed down "just" 1.1%. I'm so old, I remember when 1% moves in stocks in less than a full day was a newsworthy matter. Remember the humans! You get what you pay for and professional capital no longer pays for execution services. It's what "they" wanted. A way to manufacture artificial inefficiency. It shows. ​

Was it a big deal that PLTR was able to close above its 50-day simple moving average after having lost that level intraday? It doesn't hurt. I'll tell you that much. Now, look again. We're about to go into some depth here.... ​

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Readers will note that the selloff stopped and support was found at a precise 38.2% Fibonacci retracement of the early April through early August rally. Twelfth-century Italian mathematicians rejoice! Your model worked to a tee. The midday reversal also created a one-day candlestick that looks like a sledgehammer standing on end. You see that?

That's literally called a "one-day hammer pattern" When hammers form at known or expected support levels (such as a precise Fibonacci retracement level) a bullish signal is read by technical analysts and their algorithms. This is at least short-term bullish. It does not mean that the level cannot be re-tested. It does likely mean that at the level where the reversal occurred, professional managers are lined up in force. In short, we very likely now know where there is significant appetite for this stock. We can use that against them. We will.

In Other News...

- Fed minutes of the policy meeting that culminated on July 30, not surprisingly show a deeply divided central bank regarding the future of short-term interest rates. There were two dissents at that meeting in favor of cutting rates, the first time in more than three decades that a Fed Chair faced multiple dissents at one meeting. With the resignation of Fed Gov. Adriana Kugler and her replacement by Stephen Miran, Powell now likely faced at least three dissents at future meetings if a policy pivot is not made tomorrow at Jackson Hole.

- Make that four? The Federal Housing Finance Agency's Bill Pulte claimed on social media on Wednesday that Fed Gov. Lisa Cook had submitted what he calls fraudulent information on two mortgage applications. Pres. Trump responded by calling for her resignation, also on social media. The question now becomes, if these allegations are true, is there cause for removal from office?

This is not Cook's first brush with controversy. Cook had already come under fire from some conservative groups for, among other things, allegedly having never published a peer-reviewed macroeconomics article, despite billing herself as a macroeconomist. 

- Honeywell International HON and other investors are looking into initiating a fresh round of funding for Quantinuum, which is a quantum computing company that is catching some serious backing. The company last raised $300 million in January 2024 in a round led by JP Morgan JPM. The private firm was valued at a rough $5 billion at that time. The firm that employs more than 500 people in the U.S., U.K., Germany and Japan, may be valued closer to $10 billion this time around. Nvidia is rumored to be a potential investor.

Economics 

(All Times Eastern)

08:30 - Initial Jobless Claims (Weekly): Expecting 227K, Last 224K.

08:30 - Continuing Claims (Weekly): Last 1.953M.

08:30 - Philadelphia Fed Manufacturing Index (Aug): Expecting 7.7, Last 15.9.

09:45 - S&P Global Manufacturing PMI (Aug-Flash): Expecting 49.8, Last 49.8.

09:45 - S&P Global Services PMI (Aug-lash): Expecting 55.3, Last 55.7.

10:00 - Existing Homes Sales (Jul): Expecting 3.92M, Last 3.93M SAAR.

10:00 - CB Leading Indicators (February): Expecting -0.1% m/m, Last -0.3% m/m.

10:30 - Natural Gas Inventories (Weekly): Last +56B cf.

The Fed

(All Times Eastern)

07:30 - Speaker: Atlanta Fed Pres. Raphael Bostic.

8:00 p.m. - Jackson Hole Economic Symposium

Today's Earnings Highlights 

(Consensus EPS Expectations)

Before the Open: WMT (.74)

After the Close: INTU (2.66), ROST (1.54), WDAY (2.11), ZM (1.38)

At the time of publication, Guilfoyle was long PLTR, NVDA, JPM equity.